The American High School Graduation Rate: Trends and Levels

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1 DISCUSSION PAPER SERIES IZA DP No The American High School Graduation Rate: Trends and Levels James J. Heckman Paul A. LaFontaine December 2007 Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor

2 The American High School Graduation Rate: Trends and Levels James J. Heckman University of Chicago and IZA Paul A. LaFontaine American Bar Foundation Discussion Paper No December 2007 IZA P.O. Box Bonn Germany Phone: Fax: Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

3 IZA Discussion Paper No December 2007 ABSTRACT The American High School Graduation Rate: Trends and Levels This paper uses multiple data sources and a unified methodology to estimate the trends and levels of the U.S. high school graduation rate. Correcting for important biases that plague previous calculations, we establish that (a) the true high school graduation rate is substantially lower than the official rate issued by the National Center for Educational Statistics; (b) it has been declining over the past 40 years; (c) majority/minority graduation rate differentials are substantial and have not converged over the past 35 years; (d) the decline in high school graduation rates occurs among native populations and is not solely a consequence of increasing proportions of immigrants and minorities in American society; (e) the decline in high school graduation explains part of the recent slowdown in college attendance; and (f) the pattern of the decline of high school graduation rates by gender helps to explain the recent increase in male-female college attendance gaps. JEL Classification: I21 Keywords: high school dropout rate, high school graduation rates, educational attainment Corresponding author: James J. Heckman Department of Economics University of Chicago 1126 East 59th Street Chicago, IL USA

4 I. Introduction The high school graduation rate is a barometer of the health of American society and the skill level of its future workforce. Throughout the first half of the 20 th century, each new cohort of Americans was more likely to graduate high school than the preceding one. This upward trend in secondary education increased worker productivity and fueled American economic growth (See Goldin and Katz [2003]). In the past 25 years, rising wage differentials between high school graduates and dropouts increased the economic incentives to graduate high school. 1 The real wages of high school dropouts have declined since the early 1970s while those of more skilled workers have risen sharply (See Autor, Katz, and Kearney [2005]). According to one measure issued by the National Center for Educational Statistics (NCES), U.S. students responded to these higher incentives by completing high school at increasingly greater rates. Figure I plots the high school status completion rate overall and by race for each year since 1968 from the NCES. It is the percentage of 18- to 24-year-olds possessing a high school credential. By this measure widely regarded as the official rate U.S. schools now graduate nearly 88 percent of students and black graduation rates have converged to those of non-hispanic whites over the past four decades. The NCES also publishes a second measure of the high school graduation rate called the 17- year-old graduation ratio (Figure I). This is the number of public and private high school diplomas issued by secondary schools each year divided by the size of the 17-year-old population in that year. This measure suggests a very different assessment of the U.S. secondary schooling system. 2 Both the graduation ratio and status completion rate start at nearly the same level in However, contrary to the status completion rate, the graduation ratio estimates peak at 77 percent in 1969 and then slowly declined until suddenly reversing the long-time trend starting in

5 A number of recent studies question the validity of the status completion rate and attempt to develop more accurate estimators of high school graduation rates (See Greene [2001], Swanson [2004], Swanson and Chaplin [2003], Miao and Haney [2004] and Warren [2005]). Heated debates about the levels and trends in the true high school graduation rate have appeared in the popular press. 4 Depending on the data sources, definitions, and methods used, the U.S. graduation rate is estimated to be anywhere from 66 to 88 percent in recent years an astonishingly wide range for such a basic statistic. The range of estimated minority rates is even greater from 50 to 85 percent. This article demonstrates why such different conclusions are reached in previous studies. It uses cleaner data and better methods to estimate U.S. graduation rates. Our study is unique in its use of a wide variety of data sources and its demonstration that when comparable measures are used on comparable samples, a consensus can be reached among all data sources. After adjusting for multiple sources of bias and differences in sample construction, we establish that (1) the U.S. high school graduation rate peaked at around 80 percent in the late 1960s and then declined by 4-5 percentage points; (2) the actual high school graduation rate is substantially lower than the 88 percent estimate of the status completion rate issued by the NCES; (3) about 65 percent of blacks and Hispanics leave school with a high school diploma and minority graduation rates are still substantially below the rates for non-hispanic whites. In fact, we find no evidence of convergence in minority-majority graduation rates over the past 35 years. The decline in high school graduation is of interest in its own right as a measure of the performance of American schools. It has important implications for interpreting a wide variety of educational statistics. For example, part of the slowdown in male college attendance rates documented by Card and Lemieux (2001) is due to declining rates of high school graduation among males. In addition, half of the growing gap in female versus male college enrollments documented by Goldin, Katz and Kuziemko (2006) can be attributed to higher levels of high school graduation 3

6 among females and larger declines in male graduation rates. Our findings also have implications for the study of the effects of educational policy changes on secondary attainment rates. Many estimates of the effects of policies on high school graduation reported in the literature are based on poorly constructed graduation estimators that produce inflated levels and inaccurate time-trends. The rest of the paper proceeds as follows. Section II reviews the recent debate about high school graduation rates and various estimators. Section III shows how various adjustments affect the estimates. Section IV synthesizes the discussion and presents estimates of historic graduation rates by race and sex. In it, we also estimate the contribution of the decline in high school graduation rates to the recent slowdown in college attendance growth rates. Section V concludes. II. The Graduation Rate Debate For years, the NCES has published the two apparently contradictory assessments of the health of the U.S. secondary education system plotted in Figure I. Only a few scholars remarked on the discrepancy (See Finn [1987]; Cameron and Heckman [1993] and Heckman and Rubinstein [2001]). The passage of the No Child Left Behind Act (NCLB) in 2001 (see U.S. Congress [2001]) renewed interest among researchers in estimating high school graduation rates. NCLB made increased high school graduation a primary objective and required states and schools to monitor them as measures of adequate yearly progress (AYP). School districts and states that did not meet AYP requirements were sanctioned, primarily in the form of reduced federal funding. NCLB also revised the definition of who counts as a high school graduate. Only those students who receive a secondary credential that is fully aligned with each state s academic standards are to be counted as high school graduates. For the first time, alternative credentials, such as General Educational Development (GED) certificates and certificates of attendance, were to be explicitly excluded from state and local graduation calculations (United States Congress [2001]). 5 4

7 Using the new definition of who is a high school graduate, many scholars claim that the United States has a dropout crisis (See Greene [2001], Swanson [2004], Swanson and Chaplin [2003], Miao and Haney [2004] and Warren [2005]). The new school of thought is that the true graduation rate is substantially lower than the rate that had been reported for years by the NCES and other governmental agencies. Contrary to the official statistics of percent, researchers now report overall graduation rates closer to 70 percent. African-American and Hispanic rates are often calculated to be as low as 50 percent nationally (See Greene [2001] and Swanson [2004]). Historic trends in high school graduation have also come under closer scrutiny. In agreement with the earlier findings of Cameron and Heckman (1993), some scholars find that high school graduation rates peaked in the late 1960s and have since stagnated or fallen (See Chaplin [2002] and Miao and Haney [2004]). In response to these studies, Mishel and Roy (2006) argue that graduation rates are not nearly as low as those reported in most studies in the recent literature. They argue that overall graduation rates are 83 percent and that minority graduation rates are 75 percent, rather than the 50 percent claimed by other researchers. This paper examines these competing claims. III. Estimating the U.S. High School Graduation Rate Before turning to the data, it is important to clarify the distinction between a completer and a graduate. Following the NCES convention, we use the term high school completer to indicate a person who either graduated high school or obtained a GED certificate. GED recipients are dropouts who are exam certified as high school equivalents through the GED testing program. High school graduates are those who receive a traditional high school diploma from an accredited high school program. 5

8 In this section, we use household surveys, school administrative data and longitudinal surveys to recalculate national high school graduation rates by race and gender. We discuss the problems and limitations of each data source in detail and show that, after adjusting for a variety of sources of bias, all of these data sources give a consistent picture of U.S. graduation rates. A. Census and CPS-Based Estimates The Current Population Survey (CPS) is a monthly survey of approximately 50,000 U.S. households administered by the Bureau of Labor Statistics. It is primarily designed to track employment and earnings trends in the civilian non-institutional population. 6 However, along with economic variables, the CPS also collects the educational status of each household member. Every October, the CPS administers an educational supplement that asks more detailed questions concerning the educational history and attainment level of each household member. The NCES uses this data to calculate the 18- to 24-year-old status completion rate depicted in Figure I. Many recent papers have discussed the problems that arise from using the status completion rate as a measure of the national graduation rate (See, e.g., Chaplin [2002], Greene [2001], Swanson and Chaplin [2003] and Sum et al. [2003]). These studies claim that the status completion rate is a biased estimator of the graduation rate because: (1) GED recipients are counted as high school graduates; (2) the institutional and military populations are excluded from the CPS; (3) one household member responds for the entire household roster (i.e. proxy response bias); (4) the CPS is not able to locate all persons eligible for the survey (i.e. low sample coverage); and (5) recent immigrants, who were never enrolled in U.S. secondary schools, are included in the estimates. The final point is irrelevant for measuring the stock of labor by skill category available to the U.S. economy. It is highly relevant for assessing the performance of American schools the focus of this paper. 6

9 Using decennial Census data, we assess the importance of each of these potential biases. A sub-sample of the Census, the Integrated Public Use Microdata Series (IPUMS), contains more detailed education and demographic information than the CPS for both a 1 percent and 5 percent representative sample of the entire U.S. resident population. It is a useful tool for examining potential sources of bias in CPS-based estimates because it does not suffer from many of the disadvantages of the CPS. First, the universe is more inclusive than the CPS because it samples both the institutional and military populations. Second, coverage rates are significantly higher in the Census than in the CPS. Finally, the Census began asking immigration questions long before the CPS did so. Immigrants who did not attend U.S. schools can be identified and excluded from the calculation beginning with the 1970 IPUMS data. The IPUMS data have two important drawbacks. In contrast to the CPS supplements that are available on an annual basis, IPUMS data are only available every ten years. In addition, the IPUMS questionnaire does not distinguish between GED recipients and regular high school graduates. However, using data from the GED testing service, we are able to estimate the total number of GED recipients in each Census for a given age range and deduct them from the total number of people reporting high school completion in the Census data. The estimate of GED recipients using this method is in very close agreement with independent estimates obtained from various data sources. 7 Calculating national graduation rates by race and sex using the 5 percent IPUMS for the year 2000, we find that the status completion rate measure from the CPS suffers from significant bias. 8 The two largest sources of bias are GED certification and response bias to the CPS education question. Low sample coverage is empirically unimportant. Bias from the CPS exclusion of military personnel is negligible. The exclusion of prisoners plays only a small role overall, but is important 7

10 when computing race and gender differentials in graduation. We now discuss each of these points in detail and compute their effect on graduation rate estimates. 9 The GED The GED began as a small-scale program designed to certify veterans who interrupted their high school training to serve in the armed forces during World War II. Quinn (2008) documents how the GED changed its original mission of certifying veterans to become a substitute for high school graduation among school-age youth. In 2001, more than 1 million high school dropouts attempted to certify as high school equivalents. Of these, 65 percent were under the age of twenty-four. 10 In 1960, only 2 percent of all new high school credentials were awarded through equivalency exams in the United States. By 2001, nearly 20 percent of all new high school credentials were achieved through GED certification. 11 The GED is generally accepted as the equivalent of a high school diploma for college admissions and for determining eligibility for job training and financial aid programs. Historically, GED recipients have also been counted as high school graduates in many official federal, state, and local education statistics. Cameron and Heckman (1993) and Heckman and LaFontaine (2006, 2008) show that a GED is not equivalent to a high school diploma. Although GED recipients have the same measured academic ability as high school graduates who do not attend college, they have the economic and social outcomes of otherwise similar dropouts without certification. Despite measures of cognitive ability similar to high school graduates, GED recipients perform significantly worse in all dimensions when compared to them (Heckman and Rubinstein [2001]). GED recipients lack noncognitive skills such as perseverance and motivation that are essential to success in school and in life. The GED opens education and training opportunities but GED recipients do not reap the potential 8

11 benefits because they are unable to finish these activities. GED recipients attrite from the military at the same rate as other dropouts and they exit post-secondary schooling with nearly the same degree attainment rates as other dropouts who start with no credential (See Laurence [2008] and Heckman and LaFontaine [2008]). Despite overwhelming evidence to the contrary, the GED is often still equated with a high school diploma and the line between the two credentials is being increasingly blurred. Many states use the GED program to issue state-accredited high school diplomas on the basis of GED test scores. In New Jersey, for example, an individual need only mail in GED test scores that meet the state s GED score requirement and qualify for a state-endorsed high school diploma. Candidates do not even need to reside in the state in order to qualify. 12 These credentials are then included in official state diploma counts issued by NCES and in calculations of state graduation rates. 13 In fact, in many years, diplomas issued are greater than the number enrolled in 12 th grade. Unsurprisingly, New Jersey is estimated to have one of the highest graduation rates in the country (See Greene [2001] and Swanson [2004]). 14 Another troubling aspect of the GED program is its disproportionate use by minorities. The GED program conceals serious problems in minority education. 15 Historic trends in conventional status completion rates suggest that minorities are closing the secondary schooling gap with the majority (Figure I). However, minority male high school completers are almost twice as likely as white males to possess a GED certificate (Cameron and Heckman [1993]). A substantial proportion of the black-white difference in GED attainment rates is due to the large number of minority GED credentials being produced by the prison system (See Gensowski [2008]). Prison GED recipients now account for over 10% of all GED certificates issued in the U.S. each year. 16 If those who have served in prison are removed from the calculation, the GED attainment rates for minority and majority group males are similar. Not only is most of the convergence in male minority 9

12 high school completion rates to those of whites due to higher GED certification rates among minorities, but a substantial portion of these credentials is produced in the prison system. The 2000 IPUMS data can be used to calculate the graduation rate for year olds both including and excluding GED recipients. Counting GED recipients as dropouts has a substantial impact on overall graduation rates (Figure II). 17 The estimated graduation rate is biased upward by 7.7 percentage points when GED recipients are counted as high school graduates. The bias is larger for males than females due to high rate of GED certification in prisons among males (Figures III and IV). Excluding GED recipients lowers minority graduation rates more than majority rates. The overall black rate falls by nearly 2 percentage points more than the overall white rate after excluding GED recipients (Figure II). 18 Largely due to the disproportionate number of black males obtaining GED credentials in prison, the most significant bias occurs in the black male estimates nearly 11 points (Figure III). Incarceration There has been an explosion in the growth of the incarcerated population since the early 1980s. 19 In 2002, the total incarcerated population exceeded 2 million people for the first time. 20 Minority males, especially young black males, have been disproportionately affected by tougher anticrime measures. Nearly one out of every ten black males age is now incarcerated and it is estimated that more than one-third of all black male high school dropouts age were in prison on an average day in the late 1990s a higher proportion than found in paid employment (Western and Pettit [2000]). There is a strong negative causal relationship between education and crime (Lochner and Moretti [2004]). Thus, the educational attainment levels of prisoners are low. 21 Among the prison 10

13 population, 78 percent are uncertified high school dropouts or GED recipients. Furthermore, 56% of the incarcerated high school completion category comes via GED certification. Excluding the prison population has only a small effect on the overall graduation rate, increasing it by slightly more than 1 percent (Figure II), but has more significant impacts on race and gender comparisons. 22 Overall male rates are biased upward by 2.1 points when excluding prisoners while overall female rates are nearly unchanged (Compare Figures III and IV). Excluding the prison population decreases the estimated black-white gap in high school graduation rates by 2.6 percentage points. This change is even greater when the sample is limited to males. The black-white male gap is biased downward by nearly 5 points when the prison population is excluded, as it is in computing status completion rates based on CPS data. Armed Forces In 2000, 91 percent of military recruits across all services were high school graduates; 7.4 percent were GED recipients, and only 1.5 percent uncertified dropouts. 23 Most military personnel are high school graduates and excluding them could potentially bias the estimated high school graduation rate downward. 24 However, because the military is a relatively small segment of the population, the exclusion of the military population from the CPS has insignificant effects on the overall graduation rate. The net effect of excluding the armed forces is one-tenth of a percentage point overall (Figure II). The estimates by race are also largely unchanged due to similar high school attainment rates among enlisted whites and minorities. Immigration Many CPS-sampled 18-to-24-year-olds are recent immigrants who never attended high school in the United States. Hispanics account for most of this group. The Census data show that almost half of 11

14 Hispanics in this age group immigrated within the last ten years. These recent Hispanic immigrants are primarily low-skilled Mexican workers who have significantly lower high school attainment rates than U.S.-educated Hispanics. The large influx of immigrants into the United States in the past two decades imparts a serious bias to the estimates both in levels and in trends. 25 A meaningful evaluation of the performance of the U.S. educational system should not include people who never attended U.S. schools or those who did so only briefly. To examine the effect of immigration on the estimates, we exclude immigrants who entered the U.S. within the past 10 years in our year old sample. Including immigrants biases the overall high school graduation rate downward by 2.6 points (Figure II). The largest bias is observed for Hispanic attainment rates nearly 11 percentage points overall. Hispanic male rates are more strongly affected than female rates by the inclusion of immigrants (Figures III and IV). We show in the next section that the trends in Hispanic graduation rates are also strongly affected by this bias since the migration of workers with low levels of education has increased substantially over the past 40 years. Low Coverage and Response Bias Low coverage rates are a potential source of bias in CPS data. This source of bias is distinct from the CPS exclusion of the non-civilian and institutional populations. Coverage is usually discussed in terms of the coverage ratio, defined as the estimated population for a given group divided by the known target population size for that group based on an independent data source (e.g. Census). The coverage ratio of the CPS survey instrument is.92 overall, indicating that the CPS population estimate for the civilian non-institutional is 92% that of the Census estimate. However, coverage rates vary substantially by age and race. 26 Young minority males are the least likely to be sampled. For example, the coverage ratio for black males ages is only.66 in the CPS. In contrast, the 12

15 coverage ratio for non-black males in this age group is.85. The final CPS sample weights are adjusted by race and sex to account for this known undercoverage in an attempt to eliminate potential bias. 27 However, Sum et al. (2003) argue that low coverage leads to an upward bias in graduation rates, because those who are missed by the survey likely have lower educational attainments than the sampled population and only adjusting the weights will not fully correct for this. The Census data allow us to partially assess the role of incomplete coverage in estimating graduation rates since Census coverage is much higher than CPS coverage. A concerted effort is made by the Census Bureau to obtain accurate counts of the entire resident population every ten years including the military and institutional populations. As a result, the overall Census coverage ratio is.98 (See Web Appendix Figure S.7). 28 Minority coverage also far exceeds that of CPS data. The coverage ratio for black males and females age in the Census is.91 and.96, respectively. In addition, the inclusion of the incarcerated and military personnel in the Census data further mitigates the potential bias of CPS-based estimates. To assess the role of undercoverage in biasing CPS estimates, we compare the educational attainment distributions in the CPS March 2000 demographic supplement for the civilian noninstitutional population with those found in the 2000 IPUMS data. 29 The CPS March and IPUMS educational attainment question are essentially the same. Due to the similarity in sample design and timeframe, the estimated population counts by educational category should be closely aligned. 30 The overall population totals for year olds in the civilian non-institutional population are nearly identical in the two data sources, but the educational attainment distributions differ considerably (Figure V). The CPS overestimates the fraction of high school completers (both GEDs and high school graduates) in the 20- to 24-year-old population relative to the IPUMS and undercounts uncertified dropouts. As a result, the overall graduation rate based on the CPS data is 13

16 nearly 2 percentage points higher than a Census-based estimate for this age group. The bias is even greater for minority groups. The difference in the percentage of the Hispanic population that report being a dropout is nearly 3% points lower in the CPS March sample relative to Census (Figure V). From this evidence it would appear that the low sample coverage in the CPS survey is a plausible explanation for the discrepancy in the dropout estimates. As predicted, the CPS underestimates those with low educational attainments and more so for minority groups. A closer examination of the distributions of educational responses in the two data sources reveals that this explanation is unlikely. The CPS and Census closely align across all educational categories with the exception of two. 31 The CPS undercounts dropouts who completed 12 th grade, but received no diploma and overestimates the percentage of high school graduates who did not attend college relative to the Census (Figure V). The difference between the two data sources in the number of dropouts reporting all other grade levels (completing 11 th grade or less) is negligible. In fact, if we equate the percentage of the population in the CPS 12 th grade, no diploma, category to that found in the Census, the estimated total number of high school completers and dropouts are nearly equal for all race and sex groups in the two datasets (See the high school counterfactual in Figure V). 32 The discrepancy in the 12 th grade, no diploma category accounts for nearly all the difference in the estimated graduation rate in the two data sources. Given that the CPS survey underestimates the number of dropouts in only one category, it is unlikely that low sample coverage is the source of the discrepancy. If undercoverage is the source of bias, then we would expect a more uniform pattern of undercounting across all of the lower education categories. Scanniello (2007) reports a similar discrepancy when comparing educational responses in the CPS March against the American Community Survey (ACS). The ACS is a new Census bureau survey similar in sample design, mode of administration, and coverage to the IPUMS data. 14

17 Scanniello suggests that the discrepancy in the 12 th grade, no diploma category likely results from differences in survey administration. The ACS and Census surveys are primarily administered through a mail questionnaire while the CPS is primarily conducted through telephone interviews. It appears that respondents are able to more accurately distinguish between the two categories in the IPUMS and ACS data for two reasons. First, respondents see the available choices when responding to the paper-based ACS and IPUMS survey whereas the choices are read to them over the phone in the CPS. This may be particularly important for getting respondents to distinguish between completing 12 th grade with no degree and finishing with a diploma. Second, the ACS and Census instrument allows each member of the household to fill out questions that pertain to them rather than have one person respond for the entire household as is the case in the CPS. CPS proxy respondents are unlikely to be able to distinguish between someone who completed 12 th grade with or without a diploma. 33 The final two columns of Figure V show the total bias in the CPS survey design and the total bias in the CPS status completion rate by race. The undercounting of dropouts and the exclusion of the prison and military samples in the CPS results in a net bias of 3 points overall and over 5 points for blacks. The total bias in the 2000 status completion rate computed using CPS data is 8% overall and over 15 points for blacks. The bias in the status completion rate as an estimate of the Hispanic high school graduation rate in 2000 is very small due to the large number of recent immigrants that tend to offset the other sources of bias. 34 B. Common Core of Data Based Estimates The Common Core of Data (CCD) is collected from state departments of education and contains the number of students enrolled in each grade level in a given year, as well as the number of high school diplomas issued in that year. From these annual counts, an approximate cohort high 15

18 school graduation rate can be calculated by dividing the number of diplomas issued in a given year by the number of entering ninth-grade grade students four years earlier. Some measures adjust for migration between states in the enrollment and diploma counts while others average one or more years of enrollment data to form a smoothed estimate of the entering freshman class. Recent graduation rate estimates based on these estimators are between percent significantly lower than those calculated using household survey data (See Greene [2001] and Swanson and Chaplin [2003]). As noted by Mishel and Roy (2006), the primary reason that most of the proposed administrative-data-based graduation estimators produce lower estimates than those from other data sources is because they condition on 9 th grade enrollments. 35 The data do not give the number of entering ninth graders, but instead provide the total ninth-grade enrollment in each year. The 9 th grade is the most common grade for upper level students to be held back. This causes CCD estimators that use 9 th grade enrollments to be biased downwards because they double count retained students in the denominator. To gauge the magnitude of this bias, we estimate grade retention by calculating the percentage change in 8 th grade public school enrollment counts in a given year to the next year s 9 th grade enrollment counts (Figure VI). In the mid-1950s, fall ninth-grade enrollment counts were nearly identical to the previous year s fall eighth-grade class size. By 2000, they were over 13 percent larger. Ninth-grade retention bias is even greater for minorities than for whites. Minority 9 th grade enrollments are often percent greater than the previous year s 8 th enrollment count, as opposed to only 6-10 percent for whites. This severely biases estimated minority graduation rates downward relative to those of whites if conditioning on 9 th grade enrollment counts. The claim that only 50 percent of minorities graduate high school is due to high rates of 9 th grade retention and estimators that do not correct for this source of bias

19 To avoid this problem, we use the previous year s eighth-grade enrollments to proxy for the entering ninth-grade class. This estimator also used by Miao and Haney (2004) avoids the problem of ninth-grade retentions and produces estimates that are consistent with Census and all other data sources. Figure VII plots the estimated trends in public school graduation from the 8 th grade estimator for the graduating classes of We also indicate the sampling period of the major longitudinal data sources that we use as well as the occurrence of two major educational policy changes for reference. Overall, the U.S. graduation rate steadily increased throughout the early 1960s and peaked in the early 70s. It then steadily declined from this point until the publication of A Nation at Risk (See U.S. National Commission on Excellence in Education [1983]). A decline again followed until 2002, when NCLB graduation rate monitoring was implemented. Even with this recent surge, the U.S. graduation rate has never fully recovered to its early levels. NCLB gives schools strong incentives to raise graduation rates by any means possible. When monitoring was implemented in 2002, minority retention dropped sharply and graduation rates turned upward, especially for minority groups (Figure VI and VII). 37 A similar pattern is observed following the publication of A Nation at Risk. Whether these represent real gains or are an indication of schools cheating the system in the face of political pressure remains an open question for future research, although the timing suggests strategic behavior. Comparisons between the CCD and Census-based estimates are in close agreement. Assuming that students graduate at age 18, comparing the CCD estimates for the graduating classes of to the 2000 Census estimates for those ages 20- to 24, we find that the two data sources agree. The overall Census estimate for these graduating cohorts is 77.1 percent while the CCD estimate is 76.6 percent. The predicted rates for whites, blacks and Hispanics in the Census are 81 percent, 66 percent, and 63 percent, respectively. Using CCD data, we estimate rates of 80.5 percent, 62 percent, and 65 percent, respectively

20 Widely-used estimators that condition on 9 th enrollment greatly underestimate graduation rates, especially for minorities (Figure VIII). In 1960, the bias associated with conditioning on 9 th grade enrollment size rather than 8 th grade enrollment was nearly zero. In recent years, the difference between the two estimators is as large as 9 points overall and 14 points for minorities. For the same 2000 Census cohort previously discussed, the 9 th grade estimator predicts an overall graduation rate of only 68 percent. This is very different from the Census estimate of 77 percent. Furthermore, estimated minority graduation rates miss the mark completely. The estimated Hispanic rate is only 52 percent, while the black rate is an even lower 50 percent. Both estimates differ substantially from those obtained from both the Census and the 8 th grade estimator. While the Census and 8 th grade estimator generally agree in levels and exhibit the same overall trends in graduation over time, we will show that the 8 th grade CCD estimator consistently produces slightly lower overall estimates (~ 1%) than the Census and longitudinal data sources over time. For minorities, the disparity between the two sources is greater, generally 3 to 5 points. The discrepancy results primarily from a difference in what is being estimated. Many post-high school training and education programs such as Job Corps, Adult Basic Education and Adult Secondary Education also issue state-endorsed regular high school diplomas that are not counted in the CCDschool-based data. The number of diplomas issued by these programs is relatively small overall since GED certification is the primary focus. 39 However, these post-schooling diplomas have a greater impact on estimated minority rates since enrollment in these programs draws heavily from minority populations. CCD-based measures provide the best indicator of the performance of American public schools while the Census and other survey data are more indicative of final attainment. 18

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